Your company presents its financial plan for the next three years. One week later it already feels outdated. Your management team says they want to pay more attention to risk management. Then no one reads the risk reports. Your risk reports list countless risks. But they don’t contain any information on how to manage risk or how risk impacts your bottom line.
If these situations sound familiar, that’s because they are. More than a decade after the concept of riskreturn management became popular with the rise of enterprise risk management, or ERM, few companies include risk management in their financial and strategic decision making.
Until companies engage in dynamic financial planning, firms that generate greater value by managing core material risks will remain the exception rather than the rule.
